When must I have the EB-5 funds ready in my bank account?

I am Indian National in the United States on an H-1B visa. I own a home here that I bought with legal funds. I am thinking of using the equity in my home and savings to get most of the required capital for EB-5 investment. I see in some posts that the funds can be from loans. Must the loan be on home equity only? At what stage do I need to have the $500,000 in my bank account?

Answers

The EB-5 funds must be available in an escrow account or available to the project before the filing of the EB-5 investor I-526 petition. The loan proceeds from your house can be considered for your personal investment funds. You own the house and you need to show how the proceeds to buy the house were lawfully obtained. In addition, you will have to have the financial means to pay back the loan.

Loan proceeds certainly can be considered a lawful source of funds. You will need to document how you lawfully earned the money to purchase the home in the first place. Also, the EB-5 rules require that the capital be placed at risk (that you have invested or are in the process of investing) the full amount of capital. Therefore, you should have already obtained the funds and invested them prior to applying for EB-5. So, the funds need to be in the new commercial enterprise's bank account, not just in your bank account, and they must be at risk, i.e., committed to being spent in the business. A good business model/business plan will contain all of the verifiable and credible details to project how the funds are committed and how the full-time jobs will be created.

An I-526 petition must be accompanied by evidence that the alien has invested or is actively in the process of investing the requisite capital. The evidence must show that the petitioner has placed the required amount of capital at risk for the purpose of generating a return. The placement of capital must be an actual commitment. Evidence may include a bank statement, evidence of monies transferred or committed to be transferred to the job creating enterprise. You may use a loan if it is your asset securing the loan and you are the person responsible for repayment of the loan. The equity must be sufficient to secure the loan. Under the facts you have given, the $500,000 must be in your bank account before you file your I-526 petition. Most EB-5 enterprises require that the deposit be made to a trust account so that receipt of the funds may be filed with your I-526 petition as evidence that the required capital has been put at risk for the purpose of generating a return.

Borrowing against your home can be a lawful source of funds. You need to be able to make the full investment or place the full investment into an escrow account before filing the I-526 petition. This can be done the week before filing or months before filing.

The funds for an EB-5 petition are supposed to be available at the time you signed to the program. If you are going through a regional center, you will be required to deposit the total amount in an escrow. Thus, the plan you described will neither satisfy the standard practice nor work. Consult an EB-5 attorney or the regional center you intend to work with for better planning and results.

John J Downey

Immigration Attorney

Answered onJuly 13, 2016

Loans are fine as long as you are responsible for them; the funds should be in a separate account at the time of your filing the application.

When you must have your EB-5 funds in your bank account depends on the particular EB-5 investment, and assuming it is through a regional center, the particular regional center and project. The loan can be from any source, but it must be collateralized. You certainly need to have the $500,000 in your bank account when you are ready to start the process because transferring the $500,000 is the normal way you start. Until that point, you are simply a prospective investor.

You may use loan proceeds to invest into an EB-5 project and/or other types of funds, such as savings from earnings, gift, sale of property proceeds, etc. Lawful source of funds must be demonstrated for the original home purchase, gift, etc. If you plan to invest in a USCIS-approved regional center project ($500,000), you will need to have funds wired to the project to subscribe as a limited partner, sign all offering documents, and have proof of investment and funds tracing documentation along with lawful source of funds documentation at the time of filing of your I-526 petition with USCIS.

The loan you obtain must be secured with a collateral that you own and the source of funds for the purchase of that collateral property must be clearly documented. Thus, please prepare to show with income tax returns and bank account statements how you gathered the funds to purchase the home that you wish to use as collateral.

You should have the $500,000 ready shortly before you submit your initial I-526 application. The legal requirement is that you must have invested or be in the process of investing. The latter prong is almost never used. Therefore, it is important to have invested the $500,000 before filing your petition. Regarding the loan issue: whatever loan you choose to take on should be secured by your personal property.

You need to invest before the I-526 application is filed; hence, whenever you are ready to submit your EB-5 application package, the investment must be transferred from your account into the investment option you selected to invest in. Please hire an experienced immigration attorney to assist with this complex process. Your immigration attorney will be able to answer all of the questions listed below and more.

The funds must be available prior to the filing of any documentation with USCIS. The loans can be from any lawful source, not simply home equity loans.

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